Sustainability Evaluation and Report

SHN Engineers & Geologists

Offices in Eureka, Redding, and

Willits, California, and Coos Bay and

Klamath Falls, Oregon.

October 2015

www.SHN-engr.com

swoo@shn-engr.com

(707) 441-8855

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At SHN Engineers & Geologists, our mission and

vision statements announce the things that matter

to us: enhancing our communities, creating

rewarding environments for our employees and

shareholders, being the firm of choice in northern

California and southern Oregon, and delivering

professional solutions to our clients’ engineering

and geologic problems. We are a small business

enterprise with fewer than 85 employees, with

offices in five locations, Eureka, Redding, and

Willits, California; and Coos Bay and Klamath

Falls, Oregon. Our business incorporated in 1979,

and we are beginning our 36th year.

This Sustainability Report is the first for SHN, and

I am gratified to learn that many of our “tried and

true” business operations are considered

sustainable actions. By being fiscally conservative,

we have weathered the economic downturns

following the “Black Monday” stock market crash

of 1987, and the Great Recession of 2007-2008. By

encouraging employees to branch out into new

services, we have also been able to evolve with the

changing local economy, as it went from primarily

resource based, to a more diversified mix of

professional services, education, energy,

aquaculture, and small businesses.

Certainly we can improve in the environmental

aspects of sustainability, and the California

drought and the Governor’s Executive Order for a

25% water use reduction will likely compel us to

do so. This sustainability report provides us with

some benchmarks for water and energy use, and

waste management and reduction.

The “triple bottom line” refers to a management

approach that uses three categories to measure

business success: the financial bottom line (at the

bottom of the Profit and Loss sheet), the

environmental bottom line (which measures

water, waste, and energy balances), and the

social bottom line (which considers our

relationships between management, staff, clients,

suppliers, regulatory agencies, and

communities). One example of the triple bottom

line is the link between employee retention and

recruitment (financial aspect), employee work/

life balance (social aspect), and air emissions

from commuting (environmental aspect). This

report finds that consideration of a work at home

policy is desired by about a third of employees.

There are numerous liability and operational

issues to working at home, which would need to

be explored by our Executive Leadership Team.

However, other recommendations are more

easily addressed, such as reminding employees

and supervisors to review company policies on

flexible work schedules, and to fully

communicate expectations on billable and non-

billable hours.

A recent polling of employees found that over

half are active in numerous and varied

community service, professional, youth oriented,

environmental, educational, and public safety

organizations. SHN’s culture of community

involvement and professional excellence is the

driver behind our longevity and sustainability,

and we are committed to continuing our efforts.

K. Jeff Nelson, P.E.

Chief Executive Officer

October 2015

Letter from the Chief Executive Officer

i

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ii

Company sustainability is measured by the strength of its social, environmental, and economic foundations. When all

three are connected and strong, a sustainable company enjoys longevity and success.

Table of Contents

The Business Case tor Sustainability Reporting …………...…… 1

SHN Company Overview …………………………………...……. 2

Sustainability Evaluation Methods ………………………………. 3

Sustainability Evaluation Results ……………………...……...…. 4

Economic Aspects ……………………………...………… 4

Environmental Aspects ……………………………..…… 4

Environmental Services Provided by SHN ……………..7

Social Aspects …………………………………..………… 8

SHN’s Sustainability Recommendations ………………….…… 10

Recommendations that are Existing Actions ………… 10

Criteria for Recommendations’ Feasibility ………… . 10

Environmental Recommendations ……………………. 10

Social Recommendations ………………………………. 11

SHN Meets Sustainable Company Criteria ……………………. 11

Conclusion and GRI Recommendations ……………………….. 12

References …………………………………………………….…….13

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A Sustainability Report for

SHN Engineers & Geologists

September 2015

“SHN is among the best, and that is

why we continue to engage the firm

for our needs.”

Frank Shaw Bacik, President, General Counsel,

Town of Scotia Company, LLC

The Business Case for Sustainability

Reporting

A sustainability report is a document that

describes a company’s journey on its “triple

bottom line” (TBL) path. TBL refers to a

company’s goals for three things, 1) its financial

bottom line, 2) its people, which includes its

employees, shareholders, clients, regulating

governmental agencies, and community at large,

and 3) its environment, which the company

impacts both positively and negatively. This TBL

concept is also known as the “3P” business

management approach, referring to a company’s

profits, people, and planet. In 2012, Ernst &

Young conducted a survey of 282 environmental

strategy executives from 17 sectors, employed by

companies generating revenues of $1 billion or

more. They found that 62% of those companies

publicly report environmental and social goals,

and 59% actively measure progress towards

those goals (Ernst & Young and GreenBiz, 2013).

However, given its limited resources, how can a

small business perform similar sustainability

evaluations? How can a small company justify

the expense to shareholders and employees?

The business case for evaluating small business

sustainability is that such an evaluation:

Identifies risks that threaten a company’s

sustainability.

Focuses management on employee

motivation, retention, and recruitment.

Defines the company’s vision and strategy in

sustainability as company longevity, and

finds metrics to use as goals.

Identifies the company to like-minded

clients, organizations, and the community.

Identifies how small companies can make

steady change over time.

1

Racks for a solar panel array at Fort Bragg High School, Fort Bragg, CA.

The Business Case for Sustainability Reporting

Company Overview

2

SHN Company Overview

SHN Engineers & Geologists (SHN) provides

engineering, geologic, and related services to

communities in Northern California and

Southern Oregon. The largest of its three

California offices is in Eureka, with others in

Redding and Willits. The fourth and fifth offices

are in Coos Bay and Klamath Falls, Oregon.

SHN’s service areas are:

Civil engineering

Geosciences

Environmental services

Surveying

Permitting and planning

Special inspections and materials testing

Biological sciences

SHN has weathered financial and natural

disasters over its 36 years in business, including

1987’s “Black Monday” stock market crash, the

1992 Cape Mendocino earthquakes, the 2008

Great Recession, and the regional economic shift

from primarily resource based, to a more

diversified mix of professional services,

education, energy, government, and small

Vision Statement: SHN will be the

firm of choice in Northern California and

Southern Oregon. Through our actions,

we enhance our communities and cre-

ate a rewarding environment for our

employees and shareholders.

Mission Statement: SHN delivers

comprehensive and creative profes-

sional solutions to meet engineering,

geologic and related client needs.

businesses. Being receptive to new ideas, its

senior management allowed a sustainability

evaluation and report to

be written.

SHN’s most recent Strategic Plan (2012) states the

company’s Vision Statement and Mission

Statement, which are reproduced here.

SHN office in Eureka, CA

Sustainability Evaluation Methods

Existing company data, handbooks, and policies were

gathered and reviewed. Key staff and managers were

interviewed. The literature was reviewed to locate

benchmarks and goals for the financial,

environmental, and social aspects of similar

businesses. The Global Reporting Institute’s (GRI)

guidelines for writing sustainability reports were

followed. Similar to the financial accounting concept

of “materiality,” the scope for SHN’s sustainability

report encompasses economic, environmental, and

social aspects, but limits its coverage in some aspects

of each category, based on what is material to SHN

(Table 1).

Sustainability Evaluation Methods

3

Three Categories of Sustainability Reporting

Economic Aspects Environmental Aspects Social Aspects

Trends affecting all US

businesses Energy consumption Types of employment

Environmental trends Waste generation and

reduction (recycling)

Health and safety for

employees

General overview of financial

position and economic

performance

Water usage Training and education

Economic services provided to

stakeholders

Air emissions Equal remuneration based on

gender, nondiscrimination

Materials consumed Forced or compulsory labor

Environmental services

provided to stakeholders

Employee assessment

Product/service safety for

clients and communities

Social services provided to

stakeholders

Table 1. Material Categories and Aspects for SHN

Wastewater treatment via a natural pond system in McKinleyville, CA

Sustainability Evaluation Results—Economic Aspects

4

Sustainability Evaluation Results

Economic Aspects

Under the economic aspects, external conditions

affecting SHN’s economy were evaluated. Global

drivers include a talent shortage as Baby Boomers

retire, and global climate change, which will increase

the costs of doing business, but will also create

opportunities. In the U.S., aging infrastructure is an

external condition directly affecting consulting

engineering firms. SHN’s economic impacts on its

communities include bringing “out of the area” money

into its offices’ communities, and of course, providing

employment.

SHN’s CEO gives the employees an annual “state of

the company” presentation. In the meeting, he

provides news and a financial update of the company.

Financial data is also provided monthly to a

management group called the Executive Leadership

Team (ELT) who disseminate this information and

analysis with company staff. Financial data in this

section is largely from the 2015 presentation, which

reports on 2014.

The company’s cash flow is very good, and debt is

very low; nothing is owed on the company’s line of

credit, and the main long term debt is held by former

shareholders.

SHN uses benchmarks published by PSMJ Resources,

Inc., a consulting firm that surveys, collates, and

publishes business performance statistics for

architectural, engineering, and construction firms.

However, SHN recognizes that PSMJ’s benchmarks

are based primarily on large firms in urban areas, and

do not fully represent conditions in rural northern

California and southern Oregon. The financial

benchmarks do provide goals and a frame of reference

though.

In 2013-2014, PSMJ’s annual survey included 198

firms. SHN’s financial statistics are not provided

here, but how the company compares with PSMJ’s

2013 survey was evaluated (Table 2).

Risk management continues to be a theme affecting

all business and project decisions. Use of standard

and improved contract language is one way the

company is improving its risk exposure.

Table 2. SHN’s 2013 financial performance in context of PSMJ’s 2013 survey (PSMJ, 2013).

Benchmark statistic SHN performance in context of PSMJ 2013

benchmarks of 198 firms

Net revenues per Full Time Equivalent (FTE) 3.3% less than the PSMJ median

Staff size change (computed from 2008 to 2014,

which includes 2008-2009 recession) Within the 10

th and 25

th percentile

Profit/FTE Within the 50th to 75

th percentile

Operating profit Within 10th to 25

th percentile

Days in process Within the 10th to 25

th percentile

Pro forma profit for 2015 Within 25th to 50

th percentile

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Sustainability Evaluation Results—Environmental Aspects

Environmental Aspects

Energy consumption, waste

generation and recycling,

water use, and air emissions,

were evaluated under the

environmental aspects of

SHN’s sustainability report.

SHN provides environmental

services and benefits directly

to its clients and communities

through the projects they

design and construct, for

example, water treatment

plants, safe roads and bridges,

and remediated industrial

sites.

Energy usages at the four

offices were compared against a statewide

average estimated by the California Energy

Commission (Figures 1 and 2). The fifth office in

Klamath Falls, Oregon, was not evaluated

because it is so small.

Figure 1. Based on annual electrical energy intensity, SHN’s Coos Bay office uses

more electricity than offices of similar size, as reported by the California Energy

Commission (2006). Information for the Klamath Falls office was unavailable.

Figure 2. Based on annual

natural gas energy intensity,

SHN’s Redding and Eureka

offices use more natural gas

than offices of similar size,

as reported by the California

Energy Commission (2006).

However, the Redding

office’s use is estimated

from usage of the entire

building and natural gas is

used for air conditioning.

The Eureka office’s use

include the materials lab.

The Coos Bay office does

not use natural gas.

Information for the Klamath

Falls office was unavailable.

Sustainability Evaluation Results—Environmental Aspects

6

Non-hazardous and hazardous solid waste is

generated at project sites during hazardous materials

investigations. Waste is generated as staff follow

specific and industry-approved standard procedures

for this type of work. For example, to collect

potentially hazardous soil samples, engineers will use:

plastic gloves to prevent contamination and

cross contamination from sample to sample

bottled distilled water to clean and rinse

sample containers and collection tools

re-sealable plastic bags to further protect and

identify sample containers

depending on toxicity and classification of

possible contaminants, disposable plastic

(Tyvek) suits, boot covers, and respirator

cartridges

large plastic garbage bags to contain the

generated waste

Similarly, the materials laboratory generates solid

waste from following specific and industry-approved

standard methods. For example, concrete cylinders

are tested to ensure adequate strength, but the plastic

forms that keep the cylinders uniform are disposed, as

are the concrete cylinders.

To vary from standard methods in order to reduce

solid waste would invalidate samples and the data

obtained from them.

To estimate air emissions due to commuting, an

online and anonymous survey was conducted. SHN

employees were asked how they travel to work, how

many miles they drove if by personal vehicle, their

cars’ mileages, and whether they could work at home

one day per week. A majority (55 of 85) of

employees responded to the online survey.

Almost all employees (95%) drive personal vehicles

to work; two people take the bus and one rides a

bicycle. The median fuel consumption for all

employees is 23 miles per gallon (mpg), and the total

estimated gasoline used for employees’ round trips, 5

days per week, at 50 weeks per year, is 27,176 gallons

per year. The portion of employees who stated they

could work at home one day per week is 38%,

although some interpreted the question as could they

do parts of their job at home; they answered yes, not

considering that to save a trip, they have to spend the

entire day at home. These interpretations were made

clear by survey comments.

Given the survey results and converting gallons of

gasoline used to CO2 equivalents using an online

emissions calculator (US EPA, 2014), air emissions

due to commuting were estimated (Table 3).

All employees drive

5 days/wk for 50

weeks

All employees drive

4 days/wk for 50

weeks

Work at home policy

with 38% driving 4

days/week

Gasoline used, gal

per year 27,176 21,741 25,111

Carbon emissions in

CO2 equivalents,

metric tons

242 193 223

Number of homes

using equivalent

energy per year

22 18 20

Acres of forest

needed to sequester

equal amount per

year

198 158 183

Table 3. Estimated air emissions from employees’ commuting

7

Sustainability Evaluation Results—Environmental Aspects

Environmental Services Provided by SHN

SHN’s stakeholders are its employees,

shareholders, clients, regulatory agencies, partners,

and community. SHN provides environmental

services directly to its clients and community in

many ways, including:

The civil engineering group provides

environmental services by providing clean

drinking water, treating public wastewater

through design of modern treatment systems,

designing safe roadways and pedestrian paths,

saving energy through designing more

efficient pipe routes and buildings, and

designing safe and earthquake resistant

schools, hospitals, and other public and private

structures.

The environmental group provides

environmental services by remediating old

industrial sites, cleaning up contaminated

groundwater, minimizing and even

eliminating polluted storm water runoff,

designing fish passage, and decreasing risks of

hazardous materials discharges to water, air,

and land.

The geosciences group identifies potential land

slide and seismic areas that could prove

environmentally disastrous should they be

developed inappropriately. They also

remediate and stabilize land masses that

would otherwise add sediment to streams and

rivers, and that would threaten infrastructure

(roads and utilities) and structures.

The planning and permitting group analyzes

projects to determine their potential

environmental impact, provides assessments,

and creates alternatives for reduced

environmental impacts.

A low impact development rain garden,

Trinidad Rancheria, CA

Wastewater treatment ponds for

the City of Blue Lake, CA

8

Social Aspects

Social aspects of the company were described by

types of employment, company diversity, and

other policies and data that indicate the

company’s culture. One notable company

characteristic is its commitment to community

service, on the part of employees as individuals,

and as supported by the company. Numerous

employees are board members or officers of

organizations such as:

Chambers of Commerce

Professional organizations

Hospitals

Universities or colleges

School districts

Water and community services districts

Service organizations, for example, Big

Brothers and Big Sisters, Rotary

International, and the Northern California

Community Blood Bank (Figure 3).

Sustainability Evaluation Results—Social Aspects

Average

percentage of

volunteers in

the U.S.

25.3%

Percentage of

volunteers at SHN

45%

Figure 3. “Volunteers

are defined as persons

who did unpaid work

(except for expenses)

through or for an

organization” (U.S.

Bureau of Labor

Statistics, 2015).

SHN at Saint Bernard’s High School Career Night

Students and interns gained experience in eel grass

surveys conducted on Humboldt Bay, CA., led by SHN.

Figure 4. In 2012, 14% of engineers were women, according to a Congressional Joint

Economic Committee (Crawford, 2012). At SHN, 19% of licensed professional engineers

and geologists are women.

Sustainability Evaluation Results—Social Aspects

9

In a small company, descriptions of gender, race,

job description, and pay are likely to infringe on

an employee’s privacy. In 2012, 14% of U.S.

engineers were women, according to a

Congressional Joint Economic Committee

(Crawford, 2012). As of May 2015, 19% of SHN’s

licensed and professional engineers and

geologists are women (Figure 4). One woman is

currently in upper management at SHN, and two

others are project managers. Two women have

been in senior management in the past but are no

longer with the company. As of May 2015, two

Asian-American women are engineers, and one

Latina is an environmental technician.

Collecting a water sample from creek

contaminated by acid mine drainage.

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Sustainability Recommendations

SHN’s Sustainability Recommendations

Nineteen recommendations were generated during

the evaluation stage of the sustainability report. Six

recommendations are actions that SHN already

performs, and the remaining 13 are actions that

SHN’s Executive Leadership Team can consider.

Recommendations that are Existing Actions

Six recommendations begin “Continue…”

indicating that SHN is already acting sustainably in

those areas. These six recommendations are to

continue:

Strategic planning and scanning for trends that

could be opportunities for the company and

community.

Financial management that has been leading to

profit.

Core business of civil engineering, geosciences,

and environmental services, and evaluate

applicability of Envision certification to SHN’s

primary service areas.

Policies and practices for identifying non-

exempt and exempt employees.

Existing health and safety programs, and

consider whether the Company Safety Officer

needs assistance.

Support for employee licensing and

certifications, and continue analyzing risks of

projects that the company designs, implements,

or constructs.

Criteria for Recommendations’ Feasibility

The remaining thirteen recommendations vary in

the degree to which they require:

1. Financial resources from company profit

2. Specialized knowledge to accomplish

3. Time to accomplish

4. Immediate attention for best and clear

return

No new financial recommendations were

identified.

The environmental and social recommendations

were ranked considering the four criteria above;

in order of most feasible first, they are listed

below.

Environmental Recommendations

Present carpet tile alternative to Eureka

building owner while negotiating carpet

replacement.

Further document energy uses of the Coos

Bay and Redding offices, and investigate

whether other building tenants are likely to

use more energy than that consumed for

office work.

Discuss concerns with local computer

business to see if alternatives are available

that perform as well as their preferred brand.

As the California drought worsens and as

water rates increase, water use in all offices

should be more clearly known; conduct

further study of water usage.

Propose offering this

sustainability reporting as a

service to new and existing clients

to the senior management and

Executive Leadership Team.

Friends of the Dunes Interpretive Center, Manila, CA

Sustainability Recommendations

11

Environmental

Recommendations (continued)

Although testing lab concrete and

soil recycling has been investigated

in the past, consider reviewing its

feasibility, given increased waste

management fees.

Consider purchasing carbon credits

from the Arcata Community Forest

Barnum Tract to offset all or part of

commuting emissions.

Partner with universities and

regulatory agencies to identify ways

to reduce waste generated during

sample collection and testing.

Social recommendations

Remind or direct employees to the

server location where all staff

policies are saved, so that they are

responsible for knowing what the

policies are, as well as their

supervisors.

Consider reminding supervisors

and managers to discuss

perceptions of required non-billed

labor with employees, and

reminding employees to reflect on

the nature of any non-billed labor.

Consider whether an internally

known employee review metric

would motivate managers to

perform the reviews, or would only

add stress to reasons why timely

reviews are not occurring.

SHN Meets Sustainable Company Criteria

In general, SHN meets four sustainable company

criteria frequently cited in the literature, which are

1) sensitivity to change, 2) a well formed company

culture and identity, 3) tolerance and

decentralization of decision making, and 4)

conservative financing.

It is sensitive to environmental changes, and

responds to changes by adapting as well as

possible. An example of this characteristic is its

responses to loss of resource industry clients, as

that industry has slowly divested itself from SHN’s

region. SHN has also recognized that it can

improve and adapt to an environment of greater

competition from larger corporations.

SHN’s company identity and culture is being

refocused during new branding efforts that were

advised during its strategic planning. SHN’s

tolerance and decentralization are exemplified by

its sponsoring of new professional directions, such

as trenchless technologies or this sustainability

report. Finally, its conservative financing (limited

long term debt) has given it freedom to plan over

long time periods.

Monitor gender and race distribution in science,

technology, engineering and math (STEM) college

majors and within the engineering industry, and

periodically compare college, company, and

industry statistics. If comparisons indicate that

women and minorities are significantly under-

represented at SHN, prepare recruiting plans that

address how representation could be increased.

Consider investigating whether a work at home

policy is desirable, given new communication

technologies, and work at home policies of other

companies.

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Conclusion

Conclusion and GRI

Recommendations

SHN has a history of operating as a sustainable

company, as supported by its 36 years of

operation, and by already implementing 6 of 19

sustainability recommendations that were

identified in this report. The recession of 2008

changed its business environment, and it is

evolving and strategically planning how to best

meet increased competition from larger and out-

of-the-area companies. The remaining 13

recommendations were ranked to allow

implementation slowly and steadily. In addition,

the GRI recommends the following for all small

businesses:

Continue measurement of key indicators. In

SHN’s case, they could be financial

indicators, the employee assessment and

review metric, and energy used and waste

generated measurements.

Plan to revise the sustainability report in a

defined number of years; decide on a

reporting period and schedule.

Obtain external validation of the

sustainability report through local, state,

global entities or through non-profit

organizations.

Designate a contact person for sustainability

issues.

Engage additional external stakeholders in

future follow ups to the initial sustainability

report.

After these recommendations are discussed by

SHN’s Executive Leadership Team, an

implementation plan should be written that

includes a schedule and measurable goals to

benchmark its achievement as a sustainable

company.

Surveying (top) and coho salmon in unnamed

creek (bottom), Humboldt County, CA..

References

13

References

California Energy Commission. (2006)

California commercial end-use survey.

March 2006. CEC-400-2006-005. Retrieved

on March 13, 2015 from http://

www.energy.ca.gov/2006publications/CEC-

400-2006-005/CEC-400-2006-005.PDF

Crawford, M. (2012). Engineering still needs

more women. September 2012. Retrieved

May 26, 2015. https://www.asme.org/

career-education/articles/undergraduate-

students/engineering-still-needs-more-

women

Ernst & Young and GreenBiz (2013). 2013 six

growing trends in corporate sustainability.

Retrieved March 1, 2015, from http://

www.ey.com/Publication/vwLUAssets/

Six_growing_trends_in_corporate_sustainabi

lity_2013/$FILE/

Six_growing_trends_in_corporate_sustainabi

lity_2013.pdf

PSMJ. (2013). The leader’s dashboard of key

benchmarks. Retrieved April 25, 2015 from

http://www.psmj.com/documents/

LeaderDashboardPSMJ.pdf

US Department of Labor. (2008). Fact Sheet

#17A: Exemption for executive,

administrative, professional, computer &

outside sales employees under the Fair Labor

Standards Act (FLSA). July 2008. Retrieved

March 14, 2015 from http://www.dol.gov/

whd/regs/compliance/fairpay/

fs17a_overview.pdf

US EPA. (2014). Greenhouse has equivalences

calculator. April 16, 2014. Retrieved March

28, 2015 from http://www.epa.gov/

cleanenergy/energy-resources/

calculator.html#results

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